Have a Tax Question? Ask a Tax Expert
Welcome and thank you for giving me the opportunity to assist you with your tax question.
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, andAmortization. It is a good beginning point to measure a company's potential value, and essentially it involves subtracting expenses from revenue EXCLUDING interest, taxes, depreciation and amortization. The resulting number gives a basic picture of the company's profitability as well as its ability to pay off what it owes.
It is worth mentioning that EBITDA does not conform to general accepting accounting principles, and therefore, adjustments can be made.
As to your first question, 3 or 4 times EBITDA is 3 or 4 times the resultingnumber from the above formula.
As to your second question, amortization is excluded from the EBITDA.
As to your third question, I believe the answer is explained above.
The following is an excellent article which you might find useful as well:
Please let me know if you require further information or clarification.
Thank you and best regards,
Just to clarify, if I short an ETF, I don't pay the expense ratio because the lender is paying it, but I am obviously paying the margin fees for borrowing correct?
Thank you for your follow-up question.
You are correct.